Captive outsourcing or offshoring is a term used for establishing and operating some form of a partly/ wholly owned entity overseas. In this model, an enterprise creates its own captive site, or subsidiary, at an offshore location and staffs it with locals who become the company’s employees.
As opposed to a third-party service provider, this form of offshoring is increasingly becoming popular as the enterprise can take advantage of some of the financial benefits of outsourcing while assuming greater resource control and security.
Some key advantages of captive offshoring include:
• Captive offshoring provides scalability to large enterprises resulting in higher profit margins.
• It provides enterprises with greater control on operations, practices and policies, and on people.
• It allows an enterprise to have a vast talent which can be deployed to handle the most critical projects. Fungible talent, from offshore locations, will otherwise be difficult to hire and deploy.
• Captives allow enterprises the flexibility of developing Centres of Excellence which allows the company to align the focus on the growth and development of their company.
• Captive offshoring helps an enterprise in increasing its footprint. There are many examples of enterprises who came for cost arbitrage and stayed on for innovation, quality of talent and the development of new potential markets for their products and services.
• Offshoring tends to be a better choice for companies as compared to outsourcing. A hybrid model has also found patronage amongst large organizations.